Walker tax cuts build resume, divide state

MADISON, Wis. — Wisconsin Senate Republicans huddled on the top floor of the Capitol building earlier this week with a mission: Convince skeptical GOP colleagues that Gov. Scott Walker’s half-billion-dollar tax cut proposal is a good idea.

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With a nearly $1 billion projected budget surplus expected next year, Walker wants to slash property and income taxes as he heads into reelection this fall — a move many say could also grease a 2016 presidential bid should he decide to run.

But while adding tax cuts to his trophy collection of GOP achievements may bolster his résumé, liberal critics say he’s putting his national ambitions ahead of the state’s fiscal needs.

And he’s facing headwinds from a handful of Senate Republicans who say the tax cuts should come after paying off a slew of unpaid bills due in just a few years. Walker’s plan would actually worsen the longer-term deficit outlook.

“We’re recreating the problem,” said Dale Schultz, a 22-year state Senate Republican. “The tax plan sets us up for a very bad time in the future.”

Two years after surviving an ugly recall election for curbing union bargaining rights, Walker, who inherited a $3.6 billion deficit when taking office, is causing a rift within the party over his tax plan. While the state Assembly passed the cuts Tuesday, the Republican-controlled Senate doesn’t yet have the votes to follow suit.

Walker’s dilemma illustrates the line governors walk when they consider higher office — balancing appeal to the party’s base against local concerns.

“Walker is probably trying to appeal to the Republican national primary constituency as opposed to the population in Wisconsin, which leans somewhat Democratic,” said Paul Sracic, chair of political science at Youngstown State University in Ohio.

His Democratic foes are more direct, accusing him of sharpening his chops for 2016 at the expense of the state.

“The national spotlight is all he cares about,” said Senate Minority Leader Chris Larson (D), who worked with Walker during the governor’s stint serving Milwaukee County. “The long-term future of whatever entity he is governing is secondary to his political ambitions.”

Walker became a hero to the tea party wing of the party with his hardball tactics against unions, and gets an average 5.8 percent support among Republican primary voters, according to a compilation of recent polls from RealClearPolitics. Former GOP Govs. Mike Huckabee of Arkansas and Chris Christie of New Jersey, and Rep. Paul Ryan of Wisconsin lead the pack.

Walker’s plan couples $400 million in property tax relief with almost $100 million for a slight income tax reduction for the bottom bracket.

But Walker won’t stop there. His administration just announced it will use $300 million from the $977 million surplus to tweak tax withholding so that a family of four, for example, will pay about $500 less in taxes this year.

More boldly, he’s eyeing elimination of the income tax completely, and he’s not shy about promoting his plan as a model for the rest of the country.

Walker told POLITICO he hopes his spending and tax cuts “will inspire others,” including “states all across this country and maybe eventually Washington.”

“That will help make not only a better Wisconsin but a better America,” he said in an interview this past week.

Yet Walker denies he is trying to turn heads nationally, arguing that he is “keeping the promise I ran on … that I would lower the tax burden every year I’ve been in office.”

“If keeping your word and doing things that make the economy better and helping people in Wisconsin are good for [2016], I’ll let other people determine that,” he said Tuesday.

GOP strategist John Weaver said there is no doubt that adding a big tax cut to his résumé will help him with potential Republican primary voters. But the former adviser to Sen. John McCain (R-Ariz.) also said accusations that Walker is putting his résumé first are a cheap shot.

“The fact that someone is ambitious does not mean their policies are bad, but it’s a natural attack-line to say, ‘Oh, they’re only doing this to get press and become the face of national Republicans,” Weaver said.

First, though, Walker has to win over Wisconsin Republicans with deficit concerns.

“Look, I like tax cuts as much as anybody,” the retiring farm owner said in an interview from his office. “But when my constituents tell me that we should not create structural deficits … pay our bills first … I have an obligation.”

The state known for its battered cheese curds and craft beer is expecting the surplus at the close of the July 2013-June 2015 period.

But it will be short lived: The nonpartisan Legislative Fiscal Bureau says the state will face a $700 million shortfall during the next two-year budget cycle.